MF Global Trustee Gets $130 Million From CME for Payouts

James Giddens, trustee of the liquidation of MF Global Holdings Ltd., sworn in at a Senate Agriculture Committee hearing on the collapse of MF Global holdings Ltd. in Washington. Photographer: Andrew Harrer/Bloomberg

June 14 (Bloomberg) -- The trustee liquidating MF Global
Inc. will receive $130 million from CME Group Inc. out of a
total of $175 million the exchange is freeing up to pay back the
bankrupt brokerage’s customers and other creditors.

Commodity customers who traded on U.S. exchanges will get
$65 million, with the same amount going to customers who traded
on foreign exchanges, while non-customer creditors will get
$16.5 million, trustee James Giddens said today in a statement.
The money, belonging to MF Global and currently held or
controlled by CME, will be returned under an agreement that
requires a bankruptcy judge’s approval, with CME paying out some
of it directly, he said.

“This agreement supports my goal to expeditiously resolve
outstanding conflicts with parties as we work to recover and
distribute as much customer property as possible as quickly as
possible,” Giddens said.

More than $30 million of CME’s claims against MF Global
will have a lower priority when it comes to getting paid than
brokerage customers, he said. CME is the largest derivatives
exchange in the world.

Giddens said in April he plans to distribute another
$685 million to customers, which would bring them from 72
percent to about 80 percent of what they’re owed for funds
missing from their segregated accounts. He has estimated that
there’s a gap of $1.6 billion between the money available to pay
them and what they’re owed.

Margin Calls

Parent company MF Global Holdings Ltd. filed the eighth-largest U.S. bankruptcy on Oct. 31 with debt of almost $40
billion after making $6.3 billion in bets on sovereign debt and
getting margin calls. The brokerage is being separately
liquidated.

A hearing on the agreement with CME is scheduled for July
11 in U.S. Bankruptcy Court in Manhattan.

The brokerage case is Securities Investor Protection Corp.
v. MF Global Inc., 11-02790, U.S. District Court, Southern
District of New York (Manhattan). The parent’s bankruptcy case
is MF Global Holdings Ltd., 11-bk-15059, U.S. Bankruptcy Court,
Southern District of New York (Manhattan).